Financial Crisis News Center

Lawmakers Seek Glass-Steagall Reinstatement

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Lawmakers in the Senate and House of Representatives are seeking to reinstate the firewall between commercial and investment banking, which was removed in 1999 by the Gramm-Leach-Bliley Act.

Senators John McCain, R-Ariz., and Maria Cantwell, D-Wash., have joined forces to introduce legislation that would “return stability, security and confidence to commercial banking for the American public.” The senators stressed that banks need to be lending to small businesses and homeowners, not using deposits to fund risky investments on Wall Street.

Dodd Comments on Citibank TARP Repayment

This story appeared in Bank Digest.

Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd, D-Conn., has issued a statement on the announcement that Citigroup would repay $20 billion in TARP funds. “We provided this assistance to avert an economic collapse. It worked, and today's announcement by Citibank is another sign that things are turning around on Wall Street,” said Dodd. “But it is little consolation to taxpayers that Citi's stock is up 20% when they face unemployment rates of over 10%. Now that companies are returning this money, we should direct it towards helping small businesses expand and create jobs.”

Dodd Comments on TARP Compensation Decision

This story appeared in Bank Digest.

Following the latest round of compensation rulings by the Special Master for TARP Executive Compensation, Kenneth R. Feinberg, Senate Banking Committee Chairman Chris Dodd, D-Conn., issued a statement congratulating Feinberg’s decision to set a $500,000 salary limit for employees at four companies that received “exceptional” U.S. bailout funds. Dodd added, “This holiday season, millions of Americans are struggling with tight budgets. I appreciate Mr. Feinberg’s continued efforts to rein in outrageous compensation so that folks running companies that continue to be propped up by hard-earned tax dollars are forced to tighten their belts as well.”

Grassley Calls for More Information on TARP Fund Use

This story appeared in Bank Digest.

Senate Finance Committee Ranking Member Chuck Grassley, R-Iowa, has demanded that the Treasury Department do a better job of tracking and reporting on how recipients have been using Troubled Asset Relief Program funds. According to Grassley, an audit by the TARP Special Inspector General proved that use-of-funds reporting is “feasible and useful.”

Bernanke Argues For Maintaining Fed Supervisory Authority

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Federal Reserve Board Chairman Ben Bernanke told Congress it would be a “mistake” to remove the central bank’s supervisory authority due to the key role it plays in enabling the Fed to maintain financial stability and act as the lender of last resort.

Bernanke appeared December 3 before the Senate Banking, Housing and Urban Affairs Committee, which is considering his nomination for a second four-year term as Fed Chairman. Committee Chairman Sen. Chris Dodd, D-Conn., who said he strongly supports Bernanke’s re-nomination, has proposed stripping the Fed of its bank supervisory responsibilities so that it can focus on its core mission of monetary policy.

Grassley Requests AIG Accounting

This story appeared in Bank Digest.

Senator Chuck Grassley, R-Iowa, the Ranking Member of the Senate finance Committee has asked Treasury Secretary Timothy Geithner and the President and CEO of the Federal Reserve Bank of New York, William Dudley, to discuss the government's handling of its bailout of American International Group. In a letter sent to both Geithner and Dudley, Grassley asked for an assessment of how taxpayers get a better deal from holding AIG equity instead of debt, following an announcement by the New York Federal Reserve Bank that AIG retired $25 billion of debt by providing the New York FRBank with shares in two AIG subsidiaries.

Bernanke Confirmation Hearing Scheduled

This story appeared in Bank Digest.

Senate Banking Committee Chairman Chris Dodd, D-Conn., has announced that the committee will hold a hearing on Dec. 3, 2009, to consider President Obama's nomination of Ben Bernanke to continue as Chairman of the Board of Governors of the Federal Reserve.

Shelby Says Dodd Reform Proposal Requires “Complete Rewrite”

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Draft financial regulatory reform legislation released last week by Senate Banking, Housing and Urban Affairs Committee Chairman Sen. Chris Dodd, D-Conn., requires a “complete rewrite,” the committee’s ranking member Sen. Richard Shelby, R-Ala., said November 19.

At a hearing to commence mark-up of the Dodd proposal, Shelby said he would not be supporting the bill at this time. Dodd, meanwhile, told members that amendments to the bill should be submitted by November 25, and that the mark-up would resume the second week of December. A confirmation hearing for Federal Reserve Board Chairman Ben Bernanke would likely be held either December 3 or 4.

Senate Draft Legislation Would Overrule Supreme Court Precedent and Allow Private Right of Action for Aiding and Abetting Securities Fraud

This story appeared in Jim Hamilton's World of Securities Regulation.

The Senate draft legislation, Restoring American Financial Stability Act, would enable investors to sue persons who aid and abet securities fraud. The draft amends Section 21D of the Exchange Act to provide that, in implied private civil securities fraud actions, any person that knowingly or recklessly provides substantial assistance to another person in violation of the securities antifraud rule or any other SEC rule or regulation must be deemed to be in violation to the same extent as the person to whom such assistance is provided.

Banking Committee Announces Markup of “Restoring American Financial Stability Act of 2009”

This story appeared in Bank Digest.

Chairman of the Senate Committee on Banking, Housing and Urban Affairs Christopher J. Dodd, D-Conn., announced that, on Nov. 19, 2009, the Committee will conduct a markup to consider Opening Statements on an original bill entitled “Restoring American Financial Stability Act of 2009.”

http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=24be5c51-9cea-4ba6-8db1-cfe52005b3e6